Personal income tax

To the annual taxation and declaring of income received in 2016 applicable are the provisions of the Personal Income Tax Act (PITA).

Subject to taxation on the common annual tax base is the income of individuals received from:

employment relations;

economic activity different from the economic activity as sole proprietor and from other economic activity as per Art. 29a of the PITA;

renting or other leasing of rights or property for consideration;

assignment of rights or property;

other sources.

Note: income from other economic activity as per Art. 29a of the PITA is the income from the economic activity of individuals registered as tobacco growers and farmers, who according to law or at their own discretion are levied under the procedure stipulated for the taxation of sole proprietors’ income.

The tax on the common annual tax base shall be assessed by multiplying the common annual tax base by 10% tax rate.

The income from economic activity as a sole proprietor and the income from other economic activity as per Art. 29a of the PITA shall be levied with tax on the annual tax base, at 15% tax rate.

Deadlines:

The deadline for submitting the annual tax return as per Art. 50 of the PITA for 2016 is April 30th, 2017.

The deadline for paying the tax for additional payment, which is declared in the annual tax return, is also April 30th, 2017.

The individuals, who submit their annual tax return electronically by April 30th, 2017, are entitled to a 5% discount on the paid within the same deadline portion of the tax for additional payment under the annual tax return, provided that they don’t use the 5% discount stipulated for the February 10th deadline.

Attention! The discounts can be used if the individuals, who must pay tax in advance, did pay the full amount of the tax due within the statutory deadlines.

The annual tax return shall be submitted by resident and non-resident individuals who have received income in 2016 which is:

subject to taxation on the common annual tax base including income from employment relations pursuant to § 1, item 26, letters “f” and “i” of the Supplementary Provisions of the PITA;

subject to taxation with tax on the annual tax base for the income from economic activity as sole proprietor and the income from other economic activity as per Art. 29a of the PITA;

subject to taxation with patent tax under the Local Taxes and Fees Act (LTFA).

==> The resident individuals are obliged to declare:

1. The foreign types of income received during the year and having a foreign source:

income from dividends, liquidation quotas and interest from deposits in commercial banks;

taxable income from supplementary voluntary social security, voluntary health insurance, and life insurance;

taxable income received from exchange of shares and equity with regard to the conversion of commercial companies abroad.

2. Shares owned and shareholdings in companies, place of business, fixed establishment and real estate located abroad.

3. Loans/borrowings provided, as follows:

a) the outstanding balance of the loans provided in 2016, if their total amount exceeds BGN 10 000;

b) the outstanding balances as of the end of 2016 of loans provided during the same year as well as within the previous 5 fiscal years, if the total amount of these balances exceeds BGN 40 000;

c) the outstanding balance of loans received in 2016, if their total amount exceeds BGN 10 000, excluding bank loans received from credit institutions as per the Credit Institutions Act;

d) the outstanding balances as of the end of 2016 of loans received during the same year as well as within the previous 5 fiscal years, excluding bank loans received from credit institutions as per the Credit Institutions Act, if the total amount of these balances exceeds BGN 40 000.

Attention! Non-resident individuals, who are considered for taxation purposes resident individuals of EU member-states or countries, which are party to the Agreement on the European Economic Area, are entitled to choose to recalculate the final income tax pursuant to Art. 37 of the PITA. The choice shall be exercised by submitting an annual tax return pursuant to Art. 50 of the PITA, whereas the tax return includes all other income that are subject to declaring by the non-resident individual.

==> Cases when no annual tax return is submitted:

Free from submitting an annual tax return are the individuals who in 2016 have received only:

income from employment relationship, if by December 31st, 2016, these individuals have a principal employer who has assessed the annual amount of the tax for all the employment income received during the fiscal year, and the full amount of the tax for the fiscal year has been deducted by January 31st, 2017, and/or

employment income, if as of December 31st, 2016 the taxpayer has no employer as per his principal employment or has such an employer, but this employer has not assessed the annual amount of the tax for all the employment income received during the fiscal year, provided the following conditions are simultaneously fulfilled:

the tax on the common annual tax base is equal to the deducted in advance tax on the employment income and

the taxpayers is not using any tax benefits when he submits the annual tax return;

and/or;

3. non-taxable income, and/or

4. income taxable with a final tax as per Chapter 6 of the PITA, except for:

the income of local individuals from dividends, liquidation quotas and interest from deposits in commercial banks, income from supplementary voluntary social security, voluntary health insurance, and life insurance with foreign source, as well as the taxable income received from exchange of shares and equity with regard to the conversion of commercial companies abroad;

income of foreign individuals if they have chosen to adjust (recalculate) the final tax on income as per Art. 37 of the PITA.

Noannual taxreturnshall also be submitted in case the individuals are registered as sole proprietors, but in 2016 have not performed economic activity, have not received other income subject to declaring in the annual tax return, and there are no circumstances which the individual must declare (real estate in a foreign country, any loans received and/or provided, etc.).

The annual tax returns shall be submitted:

personally in the respective office of the NRAas per the permanent address of the individual and the sole proprietor; or

by postal order with a return receipt (see the addresses and the postal codes of NRA’s offices), or

on-site at one of the 352 post offices, where they will be given a reference number by Bulgarian Post’s official; or